Correlation Between Jpmorgan Short and Jpmorgan Large

Can any of the company-specific risk be diversified away by investing in both Jpmorgan Short and Jpmorgan Large at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Jpmorgan Short and Jpmorgan Large into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Jpmorgan Short Duration and Jpmorgan Large Cap, you can compare the effects of market volatilities on Jpmorgan Short and Jpmorgan Large and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Jpmorgan Short with a short position of Jpmorgan Large. Check out your portfolio center. Please also check ongoing floating volatility patterns of Jpmorgan Short and Jpmorgan Large.

Diversification Opportunities for Jpmorgan Short and Jpmorgan Large

-0.53

Correlation Coefficient

Jpmorgan Short  Jpmorgan Large

Excellent diversification

The 3 months correlation between Jpmorgan and Jpmorgan is -0.53. Overlapping area represents the amount of risk that can be diversified away by holding Jpmorgan Short Duration and Jpmorgan Large Cap in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Jpmorgan Large Cap and Jpmorgan Short is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Jpmorgan Short Duration are associated (or correlated) with Jpmorgan Large. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Jpmorgan Large Cap has no effect on the direction of Jpmorgan Short i.e., Jpmorgan Short and Jpmorgan Large go up and down completely randomly.

Pair Corralation between Jpmorgan Short and Jpmorgan Large

Assuming the 90 days horizon Jpmorgan Short Duration is expected to under-perform the Jpmorgan Large. But the mutual fund apears to be less risky and, when comparing its historical volatility, Jpmorgan Short Duration is 9.16 times less risky than Jpmorgan Large. The mutual fund trades about -0.06 of its potential returns per unit of risk. The Jpmorgan Large Cap is currently generating about 0.17 of returns per unit of risk over similar time horizon. If you would invest  7,267  in Jpmorgan Large Cap on September 14, 2024 and sell it today you would earn a total of  723.00  from holding Jpmorgan Large Cap or generate 9.95% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Very Weak
Accuracy	100.0%
Values	Daily Returns

Jpmorgan Short Duration  vs.  Jpmorgan Large Cap

Jpmorgan Short Duration

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Jpmorgan Short Duration has generated negative risk-adjusted returns adding no value to fund investors. In spite of fairly strong fundamental indicators, Jpmorgan Short is not utilizing all of its potentials. The current stock price disturbance, may contribute to short-term losses for the investors.

Jpmorgan Large Cap

Risk-Adjusted Performance

13 of 100

Good

Compared to the overall equity markets, risk-adjusted returns on investments in Jpmorgan Large Cap are ranked lower than 13 (%) of all funds and portfolios of funds over the last 90 days. In spite of fairly weak basic indicators, Jpmorgan Large may actually be approaching a critical reversion point that can send shares even higher in January 2025.

Pair Trading with Jpmorgan Short and Jpmorgan Large

The main advantage of trading using opposite Jpmorgan Short and Jpmorgan Large positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Jpmorgan Short position performs unexpectedly, Jpmorgan Large can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Jpmorgan Large will offset losses from the drop in Jpmorgan Large's long position.

The idea behind Jpmorgan Short Duration and Jpmorgan Large Cap pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Backtesting module to avoid under-diversification and over-optimization by backtesting your portfolios.